.

Read in Chinese

Speakers:

Mr. Xiao Yuanqi, vice minister of the National Financial Regulatory Administration (NFRA)

Mr. Li Mingxiao, spokesperson of the NFRA and director general of the Policy Research Department of the NFRA 

Mr. Liu Zhiqing, spokesperson of the NFRA and a person in charge of the Statistics and Risk Surveillance Department of the NFRA

Mr. Guo Wuping, director general of the Financial Inclusion Department of the NFRA

Mr. Yin Jiang'ao, a person in charge of the Property and Casualty Insurance Supervision Department of the NFRA

Chairperson:

Ms. Xing Huina, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

Jan. 25, 2024

Xing Huina:

Ladies and gentlemen, good afternoon. Welcome to this press conference held by the State Council Information Office (SCIO). Today, we are joined by Mr. Xiao Yuanqi, vice minister of the National Financial Regulatory Administration (NFRA), who will brief you on how the financial sector contributes to the high-quality development of economy and society, and take your questions. Also present today are Mr. Li Mingxiao, spokesperson of the NFRA and director general of the Policy Research Department of the NFRA; Mr. Liu Zhiqing, spokesperson of the NFRA and a person in charge of the Statistics and Risk Surveillance Department of the NFRA; Mr. Guo Wuping, director general of the Financial Inclusion Department of the NFRA; and Mr. Yin Jiang'ao, a person in charge of the Property and Casualty Insurance Supervision Department of the NFRA. 

Now, let's give the floor to Mr. Xiao for his introduction. 

Xiao Yuanqi:

Thank you, Ms. Xing. Ladies and gentlemen, greetings to you all. I'm very pleased to have this opportunity today to speak with you. My colleagues and I are happy to answer your questions, and we'd like to express our gratitude to you for your great support and care for the financial regulation work and the development of the financial sector. Now, I'll give a brief introduction. 

The NFRA adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and comprehensively implements the guiding principles of the 20th National Congress of the Communist Party of China (CPC) and the second plenary session of the 20th CPC Central Committee. We have thoroughly studied, taken on board and executed the guiding principles of the Central Financial Work Conference, the Central Economic Work Conference, and the important speech delivered by General Secretary Xi Jinping at a study session on promoting high-quality development of finance, attended by principal officials at the provincial and ministerial level at the Party School of the CPC Central Committee (National Academy of Governance). Following the principle of seeking progress while maintaining stability, promoting stability through progress and establishing the new before abolishing the old, we fully and faithfully apply the new development philosophy on all fronts and accelerate efforts to foster a new pattern of development, in a bid to vigorously promote high-quality economic and financial development.  

We adhere to the CPC Central Committee's centralized, unified leadership over the financial work. We will ensure that the financial work maintains political integrity and people-centeredness, and constantly deepen reform of the financial management system and the exercise of full and rigorous Party self-governance. By doing so, we aim to ensure that we will advance the financial work in the right direction and effectively implement the major decisions made by the CPC Central Committee regarding this sector. 

We abide by the fundamental purpose of the financial sector supporting the real economy. We will continuously satisfy the financial needs in economic and social development as well as the public's ever-growing demands for finance, and work to safeguard the legitimate rights and interests of financial consumers. In addition, we will actively provide support to expand effective demands and investments that generate returns, guarantee the financing needs of major projects and those for the people's well-being, and contribute to integrated urban-rural development and coordinated regional development. We will increase support for the manufacturing industry, emerging strategic industries, and science and innovation sectors. We will improve the green financial system, and support the building of a green, low-carbon development hub. We will also boost the integrated development of the digital economy and real economy. Furthermore, we will bolster financial supply to areas important to people's lives and weak links, vigorously promote inclusive finance, improve the quality of services for private enterprises, micro and small enterprises, and new urban residents (permanent residents without local household registrations), and enhance financial services to advance rural revitalization and build up China's strength in agriculture. We will accelerate the development of pension finance, continuously further the third-pillar pension plans, and fully back the development of the health industry and silver economy. We will enhance comprehensive financial services for foreign trade, and support and consolidate the overall stability of foreign investment and trade. In addition, we will expand and enrich financial instruments to meet people's multi-tiered and diverse financial needs.

We always take preventing and controlling financial risks as a constant pursuit. We will prudently guard against and defuse the financial risks of key institutions and areas, and ensure that no systemic risks arise. Following the market-oriented, law-based principle, and grasping the right timing, extent and effectiveness, we will promote small and medium-sized financial institutions in defusing their risks through reform in an orderly manner. We will unswervingly consolidate and develop the public sector and unswervingly encourage, support and guide the development of the non-public sector. We will equally meet the reasonable financing needs of real estate enterprises of different ownerships, and energetically advocate the construction of the "three major projects," including establishing public infrastructure for both normal and emergency use and renovating urban villages. Additionally, we will actively work to defuse risks of outstanding local government debt and strictly control new debt. We will conduct supervision in accordance with laws and regulations, strengthen oversight on institutions, behaviors and functions as well as carry out penetrating and continuous oversight, and promote the building of a financial supervision system and mechanism with full coverage and with no blind spots left, so as to render financial regulation more effective. 

We always promote high-quality development of finance. We will guide financial institutions to optimize their business structures and growth models, so that they can realize the transformation from extensive expansion driven by quantity to refined management focused on quality, and achieve high-quality, sustainable development. We will deepen financial supply-side structural reform, constantly consolidate the corporate governance of financial institutions, steadily improve their operation and management capabilities, and continue to establish and improve the modern financial enterprise system with Chinese characteristics. In addition, we will steadily advance high-standard institutional opening up in the financial sector, further facilitate cross-border investment and financing, attract more foreign financial institutions and long-term capital to operate and expand business in China, and encourage Chinese and foreign financial institutions to enhance cooperation for common, mutually beneficial development. 

Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the NFRA will resolutely implement the decisions and deployments of the CPC Central Committee and the State Council, fully strengthen financial regulation, prevent and defuse financial risks, and ensure that no systemic risks arise. We will also focus on supporting the "five priorities" of technology finance, green finance, inclusive finance, pension finance and digital finance, so as to provide strong financial support for the high-quality development of economy and society as well as for the realization of Chinese modernization and the great rejuvenation of the Chinese nation. 

That is all for my introduction. Now, my colleagues and I are ready to take your questions. 

Xing Huina:

The floor is now open for questions. Please identify the media outlet you represent before asking questions. 

ThePaper.cn:

The Central Economic Work Conference put forward actively and prudently defusing real estate risks and equally meeting the reasonable financing needs of real estate enterprises of different ownerships. What plans does the NFRA have for the real estate sector at present and what plans will be taken going forward? Thank you.

Xiao Yuanqi:

Thank you very much for your questions, which are of great concern and importance to the public and the NFRA. Recently, we have actively assisted industrial authorities and local governments to adopt a comprehensive approach on both supply and demand sides amid our efforts to step up financial support. The Ministry of Housing and Urban-Rural Development (MOHURD), the People's Bank of China (PBC), and the NFRA introduced the policy to recognize households with mortgage records but no local property ownership as first-time homebuyers, making them eligible for favorable down payments and mortgage rates. The PBC and the NFRA jointly released a set of 16-point financial measures to support the stable and sound development of the real estate market. They also studied and established a dynamic mechanism to adjust mortgage rates for first-time homebuyers, lowered the bottom line of mortgage rates for second-time homebuyers, and encouraged banks to lower the interest rates of outstanding loans for first-time homebuyers. All these policies and measures have delivered positive results in enhancing financial services in the real estate sector, satisfying the legitimate financing needs from the real estate market, and promoting the stable and sound development of the real estate market.

This January, the MOHURD and the NFRA jointly released a notice on establishing a financing coordination mechanism for the real estate sector at the city level. The notice urged cities at and above the prefecture level to set up a financing coordination mechanism for the real estate sector, establish a platform for facilitating communication between governments, banks, and enterprises, and promote coordination between real estate companies and financial institutions. 

We all know that the real estate sector entails a long industrial chain and covers a wide range of areas, thus playing an important role in the economy and people's lives. Therefore, the financial sector must endeavor to fulfill its responsibility to give strong support to the real estate sector. At present, banks finance the real estate sector mainly by the following means: First, by property developer loans and individual housing loans, also known as mortgage loans. To date, outstanding developer loans and individual housing loans stood at 12.3 trillion yuan ($1.72 trillion) and 38.3 trillion yuan, respectively. In 2023 alone, 3 trillion yuan in developer loans and 6.4 trillion yuan in housing mortgage loans were issued. That is to say, together, the banking sector provided nearly 10 trillion yuan in loans – a remarkable amount – to the real estate sector. Second, via banks' investment in bonds issued by real estate companies. At the end of last year, outstanding property developer bonds held by banks totaled 427.5 billion yuan. In 2023, banks invested heavily in such bonds, increasing 15% from a year earlier. In addition, banks' merger and acquisition loans and extensions for outstanding loans to real estate companies topped 1 trillion yuan in 2023.

We have actively cooperated with the MOHURD and the PBC, and provided financial support to ensure that overdue housing projects were completed and delivered. By the end of 2023, most of the 350 billion yuan worth of lending set aside for this special purpose had been delivered to such projects. Commercial banks have also provided funds to ensure the construction and delivery of presold projects.

The NFRA will guide financial institutions to make full use of existing support policies, continue to provide better financial services for the real estate market, maintain the stability of credit lines to the sector, meet legitimate financing needs, and make their contribution to promoting the stable and sound development of the real estate market. In the near future, we will focus on the following major work: 

First, we will accelerate the implementation of the financing coordination mechanism for the real estate sector at the city level to ensure it will produce effects. Under the mechanism led by municipal governments, a list of projects eligible for financing assistance will be provided on a just and fair footing to financial institutions within their respective administrative regions. All these are elucidated in the notice released by the NFRA and the MOHURD. Based on assessments of property projects using market-oriented and legal principles, financial institutions are expected to proactively meet the legitimate financing needs of projects that are making smooth progress and have sufficient collateral, reasonable liabilities, and guaranteed repayment sources. For projects that are experiencing temporary difficulties but maintaining a basic fund balance, financial institutions are expected to provide stronger support by extending outstanding loans, rescheduling repayments, and issuing additional loans rather than making hasty withdrawals, suspension, and withholding of loans. We will also meet with banks in the near future to urge them to take timely action so that with joint efforts from municipal governments and the housing and urban-rural development authorities, they will make good use of independent policy tools according to each city's own conditions to better satisfy the legitimate financing needs of real estate projects.

Second, we will urge financial institutions to effectively meet the requirements in managing operating property loans. Last night, the NFRA and the PBC jointly released a notice on managing operating property loans. The notice, which is quite targeted and made after conducting preliminary investigations and soliciting opinions and suggestions from the relevant sectors, financial institutions, and relevant authorities, allows banks to provide operating property loans for property developers. Such loans, provided by national banks on the basis of controllable risks and business sustainability, are permitted to be used by rule-following and promising real estate companies to repay their outstanding loans and bonds by the end of this year.

Third, we will continue to provide quality housing loan services for customers. According to each city's own conditions, we will support local municipal governments and housing and urban-rural development authorities to further improve housing loan policies involving down payments and mortgage rates. We will also guide and urge banks to provide better financing services to meet people's demand for buying their first homes or improving their housing situation.

Fourth, we will guide and require banks and other financial institutions to strengthen their support for the "three major projects" that include the construction of public infrastructure used for daily life and emergency situations and the rebuilding of "villages" inside cities. Meanwhile, solid progress is expected as soon as possible. Thank you.

CMG:

I would like to ask, how did the banking and insurance industries perform overall in 2023, especially in the aspects of risk and stability? And what predictions does the NFRA have regarding their development prospects this year? Thank you.

Liu Zhiqing:

Good afternoon. Thank you for your questions. Here, I will give you a brief introduction about the stable operation and overall performance in the banking and insurance sectors of last year. The total assets and main business in these two industries grew steadily. As of the end of 2023, the assets of financial institutions in China's banking sector grew 9.9% year on year to 417.3 trillion yuan. China's yuan-denominated loans rose by 22.75 trillion yuan, and the year-on-year increase was 1.31 trillion yuan more than registered in the previous year. The total debt stood at 383.1 trillion yuan, up 10.1% year on year. New yuan deposits hit 25.74 trillion yuan, down by 510.1 billion yuan from the previous year. By the end of last year, insurance company assets increased 10.4% year on year to 29.96 trillion yuan. Approximately 25.4 trillion yuan in financing support was provided for economic and social development through bonds, stocks, equity investment, and other measures, increasing 2.9 trillion yuan compared with the beginning of last year. Claim and benefit payments reached 1.89 trillion yuan, up 21.9% year on year. Agricultural insurance provided 4.98 trillion yuan to guarantee reductions in agricultural development risks.

Asset quality remained stable generally. At the end of 2023, the outstanding balance of NPLs of financial institutions in China's banking sector was 3.95 trillion yuan, up by 149.5 billion yuan compared with the beginning of last year, according to preliminary statistics. The NPL ratio was 1.62%, and the ratio of loans overdue more than 90 days to NPLs stood at 84.2%, remaining at a relatively low level. Last year, China's banking sector disposed of 3 trillion yuan in non-performing assets.

The ability to defuse risks has been strengthened. According to preliminary statistics, commercial banks had accumulated net profits of 2.38 trillion yuan in 2023, up 3.24% year on year. The balance of loan loss provisions reached 476.8 billion yuan, and the provision coverage ratio was 205.1%, staying at a relatively high level. The capital adequacy ratio of commercial banks reached 15.1%, and the tier 1 CAR was 10.5%. Among those, the capital adequacy ratio of large commercial banks reached 17.6%, and the tier 1 CAR was 11.7%. The leverage ratio of commercial banks was 6.8%, remaining stable. China's insurance sector demonstrated adequate solvency. As of the end of 2023, the comprehensive solvency ratio of the insurance sector was 196.5%, and the core solvency ratio was 127.8%. Among those, the comprehensive solvency ratio and the core solvency ratio of property insurance companies were 236.5% and 204.3%, respectively. The comprehensive solvency ratio and the core solvency ratio of life insurance companies were 186.2% and 110.3%, respectively. 

The liquidity of Chinese banks remained sound. At the end of 2023, the liquidity coverage ratio of banks with total assets no less than 200 billion yuan was 151.6%, with a net stable funding ratio of 125.5%. The high-quality liquid assets adequacy ratio of banks with assets below 200 billion yuan was 269.4%. The liquidity indicators of all kinds of institutions remained at a relatively high level. The ratio of various deposits to total liabilities reached 69.2% due to banks' steady capital sources. In 2023, the net cash flow from insurance companies' operating activities hit 1.71 trillion yuan.

Looking ahead to 2024, the fundamentals of China's economy remain unchanged, and they will maintain long-term growth. Thanks to an increasingly improved industrial foundation, factor endowments, and innovation capacity, new driving forces will be formed in new urbanization, green transformation, and other fields, which will inject strong impetus into the banking and insurance industries and provide more opportunities rather than challenges. The banking industry is expected to maintain steady growth momentum, with institutional and structural regimes becoming more reasonable and financial resource allocation also improving. In the past three years, the average growth rate of total assets in China's insurance industry remained at 8.7%, showing a sound momentum. The industry contains huge potential and strong capability to serve economic and social development, which will play more effective roles as both an economic shock absorber and a social stabilizer. Thank you.

Chengdu.cn:

How about the growth rate of loans in the manufacturing industry and for new and high-tech enterprises? What kinds of supportive measures did the NFRA take? What else will you do to encourage banking and insurance institutions to provide more financial resources to sci-tech innovation and advanced manufacturing? Thank you.

Li Mingxiao:

The NFRA has adhered to the fundamental purpose that finance is to serve the real economy. Focusing on key areas like sci-tech innovation and advanced manufacturing, we have continuously improved financial supervision policies, encouraged financial institutions to increase financial support and advance financial services, to practically promote high-quality economic and social development.

In the aspect of sci-tech innovation, we issued a circular to improve full life-cycle financial services for tech companies, allocating more financial resources to advance sci-tech innovation, as well as providing differential and various financial services to meet the needs of tech firms at different development stages. We also encourage banking institutions to diversify models for IP pledge financing services and the means of insurance to offer protection so as to attract more tech companies to apply for their initial loans with banks. We also encourage banking and insurance institutions to set up branches in places where science and technology resources are concentrated, with a focus on providing better financial services for tech firms. We have improved the mechanism applied for loans to tech companies which ensures that those who have fulfilled their duties are not held accountable. Tolerance of non-performing loans to small- and micro-technology enterprises can be relaxed by no more than 3 percentage points compared with the other loans. By the end of 2023, the balance of loans granted to new and high-tech enterprises registered an increase of 20.2% year on year. Among those, medium- and long-term loans and credit loans both accounted for more than 40%.

In the aspect of advanced manufacturing, we have improved key monitoring and daily supervision and worked together with relevant departments to jointly issue a series of policies, such as guidelines on quality projects in the manufacturing industry and guidelines on accelerating the transformation and upgrading of traditional manufacturing industry. In doing so, the policy environment of high-quality development in the manufacturing sector has been optimized, and the efforts to increase medium- and long-term loans for manufacturing companies have been made an institutionalized and regular practice. We have also guided financial institutions to give priority to supporting high-quality development in manufacturing through themed conferences and special training, which provided concrete support for the manufacturing sector to move toward higher-end, smarter, and greener production. As of the end of 2023, the balance of loans granted to manufacturing companies increased 17.1% year on year, of which the balance of medium- and long-term loans grew 29.1% year on year.

Next, the NFRA will fully implement the decisions and plans of the CPC Central Committee and the State Council, make all-out efforts to promote techfin, and promote the building of a multilevel techfin service system. Under the premise of keeping risks under control, we will work with relevant departments to steadily advance the construction of financial reform pilot zones for sci-tech innovations, intensify financial support for the manufacturing industry, and guide financial institutions to fully implement all measures and requirements. Efforts will be made to diversify financial products and services, strengthen the support for sci-tech innovation and advanced manufacturing, and foster new productive forces, thereby providing strong financial support for accelerating the establishment of a modern industrial system. Thank you!

Market News International:

How should banks optimize their credit structure and revitalize existing loans? And is there currently arbitrage trading in the banking system, and if so, what are the policies needed to address these issues? Thank you.

Liu Zhiqing:

Thank you for your questions. Over previous years, the credit structure of China's banking industry has continued to optimize, and financial support for the real economy has become more targeted and robust. Financial resources have been delivered in more key areas and weak links, such as sci-tech innovation, advanced manufacturing, green development, inclusive finance support for small and micro-businesses, and infrastructure. Our focus is on promoting high-quality economic development. My colleagues have talked about the statistics on how the financial sector supports the real economy. Through the efforts of financial regulatory authorities, banking institutions have increased their disposal and recovery of non-performing assets over the years. Since 2017, a total of 18 trillion yuan of non-performing bank assets have been disposed of. A significant amount of financial resources that were occupied were put into more efficient use and allocated to sectors that are more promising and in need. In terms of the use of funds, the vast majority of the funds are used for the real economy to meet the financing needs of enterprises, residents, and other market entities, thereby supporting the recovery of the economy and boosting effective demand.

Going forward, the NFRA will continue to guide and support the banking institutions in increasing credit support and optimizing the structure. We will focus on five key areas: techfin, green finance, inclusive finance, elderly care finance, and digital finance. Our goal is to remove obstacles to the flow of funds into the real economy and increase the efficiency of capital use so that the real economy can be better served by financial resources. Thank you.

China Banking and Insurance News:

The central financial work conference pointed out that economic and financial risks remain relatively high and require relevant departments to timely handle the risks of small and medium-sized financial institutions. What measures will the NFRA take in 2024 to address such potential risks? Thank you.

Xiao Yuanqi:

Thank you for your question, which many of you may be concerned about. I'll be happy to answer it. First, I want to share with you some statistics. Currently, there are 3,912 small and medium-sized banks in China. These are mainly city commercial banks, rural credit cooperatives, and rural banks, with total assets of 110 trillion yuan, accounting for 28% of the total assets of the banking industry. For these 3,912 banks, the outstanding agricultural loans and small and micro enterprise loans stood at 21 trillion yuan and 29 trillion yuan respectively, accounting for 38% and 44% of that of the entire banking industry. These small and medium-sized banks play a vital role in supporting private, small, and micro businesses, as well as rural development and revitalization. The operations of China's small and medium-sized banks are generally stable, with stable asset quality, strong capital strength, and good performance in terms of capital adequacy ratio, provision coverage ratio, and asset quality. These are all reasonable and healthy indicators of their operation and regulation. However, a small number of small and medium-sized banks have accumulated some problems and risks in the past, and the risks of some small and medium-sized banks remain relatively high. Compared to the whole banking industry or the small and medium-sized banking system, these high-risk banks account for a small proportion in terms of number, assets, and non-performing assets. For these small and medium-sized banks with relatively high risks, we will conduct strict regulations to gradually reduce their risks. Additionally, we will work with local party committees, governments, and relative departments to roll out customized plans and measures for deepening reform and addressing risks. In general, we are using multiple methods to resolve and dispose of the existing risks in a prudent and orderly way, as well as controlling the new risks in a strict manner. As a result, a large number of such banks have reduced their risks and achieved sustainable operations. Our measures to deepen reform and address risks are paying off.

The financial regulatory authorities will fully implement the decisions and plans of the CPC Central Committee and the State Council, work with local party committees, governments, and relevant departments to push forward reform, prevent and control risks of small and medium-sized banks, and improve their management. Our work will focus on the following aspects:

First, strengthen corporate governance. We will integrate party leadership with company management, optimize the equity structure, standardize the duties of corporate governance entities, and establish a balanced and efficient corporate governance mechanism. In particular, we will make efforts to guard against manipulation by major shareholders and insiders and prevent the transfer of interests and illegal and irregular transactions.

Second, we will work with local party committees and governments to select and appoint qualified personnel for key positions in local small and medium-sized banks according to the standards of political strength, competence, and discipline. We should also strengthen the construction of the executive team and the talent pool. Efforts will be made to require large banks and national joint-stock banks, as well as some leading small and medium-sized banks, to transfer talents and technology to other local small and medium-sized banks, including the core customer system and the risk control system. This work has already begun, and the results are significant. For example, China Merchants Bank has provided great support to Liaoshen Bank in terms of risk control, talent, and information systems. We will enhance the behavior management of executives and key personnel, improve their political integrity, legal awareness, and professional competence, and ensure that they operate banks in line with laws and regulations.

Third, category-based policies will be implemented to deepen reforms. For the system of rural credit cooperatives, the focus is on transforming the functional positioning of provincial rural credit unions and standardizing their performance. The "one province, one policy" initiative has been launched to implement reforms in rural credit cooperatives, achieving phased results. Some reform plans for rural credit cooperatives have been approved by the State Council, some are actively being organized and implemented, and some have already started operations. We have conducted a phased assessment, achieving the expected results and demonstrating the effect. We have adopted a combination of measures to advance reforms in  city commercial banks. The "one bank, one policy" initiative has also been launched. The overall goal is to fundamentally enhance small- and medium-sized banks' long-term sustainable operation and development by further reforming the systems and mechanisms. This will better serve the real economy and numerous households and enhance risk prevention and control.

Fourth, we will urge small- and medium-sized banks to focus on their main businesses. Small- and medium-sized banks must firmly adhere to their market positioning of serving the local community, small and micro businesses, agriculture, rural areas and farmers, contributing to rural revitalization. They should base themselves locally, become more refined, and deeply cultivate their local markets. Small- and medium-sized banks have a natural advantage in being familiar with the local environment. Small- and medium-sized banks should have the will and ability to resist the temptation of disregarding risks and recklessly pursuing rapid and complete development. Small- and medium-sized banks should carry out differentiated and characteristic operation and give full play to their unique advantages. Small- and medium-sized banks have many advantages, and they are very familiar with customers in the local area. This advantage must be fully utilized, and the future development prospects of small- and medium-sized banks are quite broad.

Fifth, we will adhere to results-oriented and problem-oriented approaches, seeking stability while making progress, addressing both the symptoms and root causes, and comprehensively strengthening supervision to prevent and resolve risks. We will strictly regulate the entry standards of small- and medium-sized banks, strictly regulate the access qualifications of shareholders and executives, and thoroughly examine the sources of capital, utilizing capital's role in controlling leverage, allocating resources, and absorbing losses. Capital supervision is crucial and a key focus of our regulatory efforts. We will implement early identification, warning, mitigation, and disposal of risks, adhering to the "four earlies" approach and the principle of early prevention and control of small risks. We will establish a robust corrective mechanism with stringent constraints. Efforts will be made to prevent and control risks in small- and medium-sized banks, as well as in larger institutions. Efforts should be directed towards preventing and controlling existing risks, and the most important is controlling new risks. We will focus on the "key individuals," "key events," and "key behaviors" associated with financial risks, strictly enforce the law, take an unequivocal stance, and resolutely crack down on financial corruption and illegal activities. It is necessary to stimulate and enhance the endogenous mechanism of financial institutions to prevent and control risks, and further strengthen and solidify it, so as to prevent, control and manage risks fundamentally and at their source. We will actively promote a financial culture with Chinese characteristics and resolutely follow the path of developing finance with Chinese characteristics. Thank you.

China Economic Information Service: 

We know that in recent years, China has continuously promoted the specialized development of old-age financial institutions, and old-age financial reforms are steadily advancing. Could you please introduce the current situation of this work and the arrangements for the next steps? Thank you.

Yin Jiang'ao: 

This question is closely related to each of us. The NFRA adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, continuously deepens the reform of commercial old-age finance, and has achieved certain results in guiding old-age insurance institutions to focus on the transformation and development of their main businesses, and serving the construction of China's multi-level and multi-pillar old-age insurance system.

First, we have vigorously developed commercial insurance annuities. We support insurance institutions in leveraging their advantages in long-term, stable investment and old-age risk management to continuously expand the supply of commercial insurance annuities. Currently, the accumulated scale of pension funds has exceeded 6 trillion yuan, covering nearly 100 million people.

Second, we have initiated a pilot program for old-age wealth management products. These products adopt asset allocation strategies that meet old-age needs, realizing the long-term and stable appreciation of investors' pension benefits. Since the pilot program started in September 2021, 11 wealth-management companies have issued 51 products in 10 pilot cities, attracting approximately 470,000 subscribers and reaching a scale of more than 100 billion yuan.

Third, we have promoted the development of specific old-age deposit pilots. These deposit programs are piloted by the four banks — Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank — in five cities. The terms are divided into four categories: five years, 10 years, 15 years, and 20 years, with interest rates slightly higher than those of five-year deposits at large banks. Since the pilot programs began in November 2022, approximately 200,000 depositors have participated, and the total balance is nearing 40 billion yuan.

Fourth, we have initiated a pilot program for commercial pension businesses. Commercial pension is offered by old-age insurance companies, encompassing old-age planning, account management, and financial products to deliver comprehensive life-cycle pension fund management services to consumers. Since the pilot program commenced in January 2023 in 10 provinces (municipalities), more than 590,000 accounts have been opened.

Fifth, we have promoted the regular operation of exclusive, commercial, old-age insurance. This product offers universal old-age insurance with simplified insurance process, flexible payments, and stable returns. It ensures annuity payments are received after reaching the age of 60. The pilot program began in June 2021 and was officially launched in October 2023. As of the end of the previous year, the number of policies stood at approximately 740,000, with the accumulated old-age reserve exceeding 10.6 billion yuan.

Sixth, we have actively fostered the growth of the personal pension system. We provide guidance to commercial banks, wealth-management companies, insurance firms, and other entities to actively participate in personal pension offerings. We also encourage the establishment of a comprehensive industry information platform and the creation of product display areas to simplify consumer decision-making.

Seventh, we have consistently advanced the professional development of old-age insurance companies. In November 2023, the interim measures for the supervision and management of pension insurance companies were issued, laying out precise requirements for corporate governance, business management, and the enhancement of risk prevention and control within pension insurance companies.

Next, we will thoroughly study and implement the guiding principles of the Central Financial Work Conference, focusing on the critical task of developing financial services for elderly care and implementing policies related to the silver economy. We will encourage insurance institutions to leverage their advantages in offering insurance protection to vigorously develop commercial insurance annuities. We will use exclusive commercial pension insurance as a key approach to actively meet the pension security needs of people in new industries and business models. We will further optimize the supply of financial products related to private pensions and improve the related regulatory rules in accordance with the characteristics of private pensions. We will promptly summarize experiences and continuously promote the pilot of commercial pension finance. We will also steadily push forward the transformation and development of pension insurance companies, guiding them to leverage their professional advantages and better participate in and serve the construction of China's multi-tiered and multi-pillar old-age insurance system. Thank you!

Yicai: 

I would like to ask, how will the NFRA optimize the structure of inclusive loans to small- and micro-businesses and loans to agriculture, rural areas and farmers in the future in order to promote a stable reduction in comprehensive financing costs? Additionally, how will the administration comprehensively utilize inclusive credit and insurance to support the development of enterprises that use special and sophisticated technologies to produce novel and unique products? Thank you.

Guo Wuping:

Thank you. The development of inclusive finance was proposed at the third plenary session of the 18th Central Committee of the Communist Party of China in 2013. After more than a decade of development, inclusive finance in China has made significant progress. The NFRA has continuously strengthened regulatory guidance. Most banks have established special departments for inclusive finance, increased the proportion of inclusive finance in their internal assessments, and continuously improved their service quality and efficiency in key areas such as small- and micro-businesses, agriculture, rural areas, and farmers to serve the real economy. As of the end of last year, outstanding loans to small- and micro-businesses reached 29.06 trillion yuan, a year-on-year increase of 23.27%. This rate is 13.13 percentage points higher than the average growth rate of all loans. Additionally, the interest rate has been decreasing annually, with the average interest rate for newly issued inclusive loans to small- and micro-businesses last year being 4.78%, a year-on-year decrease of 0.47 percentage point. Inclusive loans for agriculture, rural areas, and farmers reached 12.59 trillion yuan by the end of last year, a year-on-year increase of 20.34%, which is a relatively fast growth rate, exceeding the average growth rate of all loans by 10.2 percentage points. The interest rate also recorded a year-on-year decrease of 0.87 percentage point. These are manifestations of the inclusive financial system with Chinese characteristics.

This year, we will follow the decisions and deployments of the Central Financial Work Conference, implement the requirements regarding inclusive finance, and integrate loans to small- and micro-businesses, loans to agriculture-related entities, and loans to private enterprises to form a unified regulatory approach for inclusive credit. We will carry out assessments, evaluations, and data disclosure and, at the same time, clarify regulatory focuses. There are several aspects to this:

First, we will require banks and other financial institutions to focus on the capital needs of small- and micro-businesses and agriculture-related entities, reasonably determine the pace of credit issuance, and strive to ensure that the growth rate of inclusive loans in these two areas is not lower than the average growth rate of all loans.

Second, we will actively develop first-time and follow-up loans, ensuring that follow-up loans continue wherever possible. We encourage medium- and long-term loans that match the production and operation cycle, and promote revolving loans that can be borrowed and repaid at any time to meet the diversified financing needs of market entities.

Third, we will gradually increase the proportion of collateral-free loans for small- and micro-businesses, which reached 19.19% at the end of last year, a year-on-year increase of 2.29 percentage points. This year, we will continue to encourage banks to relax collateral requirements and increase the issuance of credit loans.

Fourth, we will strengthen regulatory oversight of financial institutions in areas such as product sales, information disclosure and fee pricing to protect private enterprises' legitimate right to autonomous choice and fair trade. At the same time, we will increase credit support for private small- and micro-businesses, ensuring that their loan growth rate is not lower than the growth rate of all loans. We will also enhance credit support for small- and micro-business owners to raise the proportion of loans and the number of accounts for small- and micro-businesses. Additionally, we will reasonably increase the loan-to-deposit ratio in counties, allocate a certain proportion of new county deposits for local loans, and provide comprehensive financial services in counties to promote balanced development between urban and rural areas and contribute to common prosperity.

For enterprises that use special and sophisticated technologies to produce novel and unique products, we will encourage banks, in terms of inclusive credit, to consider the characteristics of these enterprises. Banks are advised to apply big data, artificial intelligence, and other technologies to support credit decisions. We will actively use information about these enterprises' technological research and development, patent innovation, intellectual property, and so on, to develop exclusive financial products for them and expand the scale of credit. Additionally, inclusive insurance can be utilized. We will encourage insurance companies to strengthen insurance services throughout the entire lifecycle of these innovative SMEs. For example, we will promote distinctive insurance products such as property insurance for research and development equipment, product liability insurance, product quality assurance insurance, patent insurance, export credit insurance, and insurance for the first set of major technical equipment. These products are designed to help enterprises mitigate disasters and losses, expand foreign trade, and pursue sci-tech innovation.

We will uphold a people-centered approach in financial work, bear in mind its political significance, make more efforts in inclusive finance, and strive to build China's characteristic inclusive financial system that is accessible, beneficial, and affordable in order to better serve the real economy and the people. Thank you!

China News Service: 

In promoting green finance, what specific implementation plans and incentive measures does China have to promote green and low-carbon transformation and the development of the environmental protection industry?

Li Mingxiao: 

Thank you for your question. We have always placed great importance on green finance, and China's green finance is at the global forefront. In recent years, the NFRA has adhered to the guidance of Xi Jinping Thought on Ecological Civilization. It has encouraged the banking and insurance systems to increase financial support for green development, continuously improving the service quality and efficiency of green finance, and thus promoting the green transition of economic and social development. We have carried out work in the following five aspects:

First, we have strengthened regulatory guidance. We have promoted the implementation of the "Guidelines for Green Finance in the Banking and Insurance Industries." We have enhanced tracking, monitoring, and supervision, organized symposiums on green finance services, and guided banking and insurance institutions to develop green finance from a strategic height. This includes increasing support for green, low-carbon, and circular economies, preventing environmental, social, and governance risks, and improving their own environmental, social, and governance performances. We have also worked with relevant departments to promote the construction of a green finance standard system. We will research and improve green finance support measures in the fields of industry, construction, and ecological and environmental protection, guide localities in exploring green finance practices, and improve various supporting policy measures. 

Second, we improved statistical monitoring. We regularly organized banks to tally green financing data, used all sorts of funding to offer support, and guided banks' credit funds to support the development of green and low-carbon industries in a market-oriented and law-based manner. As of the end of 2023, 21 major banks' green credit balance reached 27.2 trillion yuan, up 31.7% year on year. We improved the statistical standards for green insurance and pushed for insurers to enhance risk protection in the fields of environmental resource protection and social governance, green industries, and green living consumption. In 2023, green insurance premiums reached 229.7 billion yuan, with insurance indemnities reaching 121.46 billion yuan. 

Third, we optimized performance appraisals. We organized 21 major banks to conduct green credit self-evaluation and urged self-examination and prompt rectification in accordance with relevant supervision mechanisms and criteria. We guided the China Banking Association to conduct green banking reviews. Green financing has been seen as an important reference for the regular supervisions, on-site inspections, and corporate governance requirements of banks and insurers, enhancing the incentives and constraints to promote the development of green financing. 

Fourth, we enriched products and services. We encouraged banks and insurers to fulfill their duties and develop climate-friendly green financing products, lawfully, with controllable risks and business sustainability, and meet green and low-carbon projects' financing and risk management requirements so as to provide diversified and differentiated financing services. We broadened the coverage of green insurance, developed green trust funds and green leasing, and expanded green consumption credit services in an orderly manner. We steered insurance funds to support green projects' investment and construction. 

Fifth, we strengthened risk management. We set up information-sharing mechanisms with other departments in charge of these industries to promote regulatory coordination. We urged banks and insurers to establish and improve green financing management systems and include environment, society, and governance-related requirements into the comprehensive risk management system. We strictly controlled new financing projects related to carbon emissions and firmly curbed the unbridled development of projects with high energy consumption, high emissions, and low quality, so as to reduce carbon emissions and ensure energy safety and industrial and supply chain safety. We guided banks and insurers to explore and address climate-change related financial risks and enhance risk management and information disclosure. 

In the next step, the NFRA will firmly implement the decisions and arrangements of the CPC Central Committee and the State Council, fully advance the grand strategy of promoting green financing, improve the policy system for developing green financing, optimize financial products and services, and guide banking and insurance sectors to provide financial services and contribute to achieving peak carbon emissions and carbon neutrality and building a beautiful China. Thank you.  

Zhinews of Shenzhen Satellite TV:

Digital financing has been developing rapidly. What new plans and strategies have been formulated to strengthen digital financing regulation and risk control, as well as promote innovation in financial technology? Thank you.

Liu Zhiqing:

Thank you for your question. People are concerned with the progress made in digital financing as well as related regulation. At present, digital technologies, such as internet technology, big data, cloud computing, artificial intelligence, and blockchain, are developing rapidly and transforming our way of living and production. The central financial work conference proposed five initiatives, including one targeting digital financing. We are paying great attention to this sector and have adopted a series of measures to promote digital financing and to steer the digital transformation of the financial sector. For example, we encourage banks and insurers to continue to enrich digital financing products and services in the important fields involving small and micro-sized businesses, green development, agriculture, rural areas, and rural residents, sci-tech innovation, and global trade. We continue to follow up on the implementation of the previously released guidelines on the digital transformation of banking and insurance sectors, advance the objectives and tasks of digital transformation of financing step by step, and promote exchanges of digital transformation experiences between institutions. We support large institutions to fully mobilize internal resources, offer risk control tools and technologies to small and medium-sized financial institutions under market-oriented and law-based principles, and help small and medium-sized financial institutions enhance risk management. Mr. Xiao just mentioned several examples of cooperation. Through collective efforts of financial institutions and supervisory departments, the financial sector's digital transformation advanced quickly, offering products and services with better quality and effect to benefit the real economy. 

We will continue to strengthen supervision and guidance and promote digital financing with diversified measures. We will guide financial institutions to improve the quality and effect of services and thoroughly enhance risk management. 

First, we will continue to promote digital transformation in the banking and insurance sectors. We will conduct assessments of digital transformation-related work and incorporate them into the supervisory and rating system of banking and insurance sectors' use of information technology. We will guide financial institutions to strengthen top design and coordinated planning, devise science-based development strategies, increase investment in resources and factors of production, and reform management and services. 

Second, we will enhance the effectiveness of digital empowerment. We will fully mobilize financial institutions to initiate actions, continue to optimize digital financial products and services, provide financial support in important areas such as sci-tech innovation, advanced manufacturing, green development, and development of micro, small and medium-sized enterprises, and effectively reduce corporate financing costs. Financial institutions will actively expand service channels, including mobile internet terminals, reach out through digital technologies to clients that traditional financial services have difficulty attracting, and continue to elevate the inclusiveness and accessibility of financial services. 

Third, we will improve the risk prevention and control capabilities of related industries. We will push banks and insurers to integrate digital risk control tools into their workflows, fully utilizing digital capabilities to level up risk management, internal control and compliance.

Fourth, we will improve the supervision of network safety and data security risks. We will push banks and insurers to improve regular monitoring of network safety risks and emergency response capabilities, effectively protecting data security and client information, and enhancing the risk management of technology outsourcing in digital ecosystem scenarios. 

Fifth, we will regulate digital innovation and secure the bottom line of risk control. We will demand that banks and insurers establish prudent approval processes, assess the technological and business logic changes brought by new products, new businesses, and new modes, and make sure that the use of new technologies is prudent and compliant with regulations so as to secure the bottom line and prevent risks while going through digital transformation. Thank you. 

Xing Huina:

Due to time constraints, we will now take one last question.

Economic Daily:

The Central Financial Work Conference stressed that we should work hard to advance high-level opening-up of the financial sector, steadily expand institutional opening-up, and attract more foreign financial institutions and long-term capital to invest and operate in China. How will the NFRA implement the guiding principles of the conference to promote the high-level opening-up of the banking and insurance industries? Thank you.

Xiao Yuanqi:

Thank you for your question. I'll answer this one. We recently launched over 50 measures to promote opening-up of the financial sector, which can be summarized in the following aspects:

First, we have scrapped restrictions on the ratio of foreign shareholding in banking and insurance institutions, including restrictions on equity investment, acquisition and capital increase in financial institutions. Foreign investors can now hold 100% of shares of a banking or insurance institution in China, gaining full ownership. There are now such institutions, including wholly foreign-owned insurance companies, wealth management companies with foreign majority ownership, wholly foreign-owned money brokerage companies, and wholly foreign-owned insurance asset management companies. They have all been approved to open for business and are operating well at present. In addition, all the restrictions concerning the financial sector in the negative list for foreign investment have been removed.

Second, we have significantly eased the quantitative entry thresholds for foreign institutions. Requirements in the past regarding total assets and operation terms for foreign-funded banks and insurance institutions have now all been canceled. More emphasis is now laid on comprehensive assessment of the qualification of foreign investment. For another example, the types of institutions have also been greatly enriched. Now various foreign financial institutions, including banks, insurance companies, brokerage companies, wealth management subsidiaries and asset management companies, have been established in China and are operating well. There are now five wealth management subsidiaries with foreign majority ownership in China and they have very good experience and practices concerning product design and risk control and prevention. For another example, foreign-funded banks and insurance institutions now have exactly the same business scope as their Chinese counterparts and receive full national treatment.

As of the end of last year, foreign-funded banks had established 41 legal-person banks, 116 branches of foreign and Hong Kong, Macao and Taiwan banks, and 132 representative offices in China. The number of operating institutions totaled 888 and total assets reached 3.86 trillion yuan. Overseas insurance institutions had established 67 operating institutions and 70 representative offices in China. The total assets of foreign-funded insurance companies reached 2.4 trillion yuan and their market share in the domestic insurance sector had reached 10%, a relatively high proportion. With in-depth participation in the development of China's economy and finance and in the operation of the financial market, foreign-funded financial institutions have become a very important force in China's financial sector. 

We will further align with relevant rules and regulations in the financial sector in international high-standard economic and trade agreements, and resolutely continue to advance high-level opening-up in the financial sector. On the basis of implementing the pre-establishment national treatment plus negative list management system, we will adhere to the market-based, law-based and international principles and welcome various foreign-funded institutions and long-term capital to China to set up and develop businesses. We will encourage foreign-funded financial institutions to carry out extensive cooperation with their Chinese counterparts in equity management and product development, such as through exchanges and training for technologies and personnel.

At the same time, we also welcome foreign-funded institutions with professional expertise in wealth management, asset management, asset utilization and disposal, as well as climate change response, green finance and sustainable operations to come to China to engage in various forms of cooperation. We will also support foreign financial institutions to deeply engage in supporting Shanghai and Hong Kong to cement their positions as international financial centers. China will continue to expand the opening-up of the financial sector.

That's all for my answer to your question.

In addition, I would like to add a few words to the earlier question with regard to improving the credit structure of banks. In terms of regulation, we have introduced two very important quantitative regulatory measures and rules for optimizing the structure of credit assets. First is the regulation of credit and loan concentration where credit granting and loans to a single customer, a single group and a single sector are all linked to capital, with very strict proportions, to prevent financial resources only flowing to large enterprises. There is another very important regulatory indicator. We have launched a joint credit granting mechanism where banks are able to share information concerning credit granting and financing regarding the same enterprise. By doing so, we will ensure that the corporate debt ratio will not be pushed up to a high level and financial resources are utilized in areas where they are most needed, so as to meet the actual and reasonable financing needs of different enterprises, individuals and market entities, avoid funds circulating within the financial sector without entering the real economy, and increase the efficiency of the use of funds. 

That is all from me. I would like to thank you and all the friends from the media for your questions. Thank you all again for your interest in and support for the work on finance, especially the regulation work of the NFRA. Thank you.

Xing Huina:

Today's briefing is hereby concluded. Thank you to all the speakers and friends from the media.

Translated and edited by Xu Xiaoxuan, Wang Wei, Li Xiao, He Shan, Lin Liyao, Huang Shan, Cui Can, Li Huiru, Xiang Bin, Wang Yanfang, Zhang Lulu, Wang Qian, Liu Sitong, Zhang Rui, Xu Kailin, David Ball, Tom Arnsten, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.